30 homes on offer in flagship Govt scheme

This is what the 2-bedroom units for some first-time buyers will look like. Photo / Supplied

The Government has finally implemented an election promise to help low-income people buy their first homes - but only 30 lucky families will be able to use the scheme initially.

The long-awaited "Gateway" scheme, promised in August 2008, will let families buy a house on Crown land by paying up front for the house only, with payment for the land deferred for 10 years.

No interest will be payable on the land for the first five years. After that home buyers will pay interest of just 1 per cent a year in years six and seven, 3 per cent in years eight and nine and 5 per cent in year 10.

Interest will also accumulate at 3 per cent a year, non-compounding, to be paid when the family buys the land. For a $100,000 initial land value, the family would need to pay $130,000 to buy the land after 10 years.

The highly concessionary scheme was tagged as a $96 million four-year "fiscal risk" in last year's Budget. But the item was cancelled in an update last December and Housing Minister Phil Heatley said yesterday that the scheme would now cost only $30,000 to $40,000 per section over 10 years.

He said the scheme would start with just 30 sections because he wanted to see how it worked out before scaling it up. Most of the initial sections are owned by Housing NZ and all are vacant land.

Community Housing Aotearoa chairman Alan Johnson said the 30 sections were "a good start".

Labour shadow housing minister Moana Mackey said work on a similar scheme started before Labour lost the 2008 election and she did not know why it had taken two years to implement.

"I can only assume it's not a high enough priority for this Government," she said. Mr Heatley said it had taken time to identify suitable land and negotiate with community housing trusts and banks.

"Kiwibank has given their confidence that they are happy to work it through. At this stage it's just Kiwibank."

The 30 initial sections include 17 on the old Hobsonville airbase, where home buyers will be required to buy house-plus-land packages at prices starting from about $350,000 for a two-storey, two bedroom unit with land.

Other sections are in Dryden Rd in Hamilton and in Gisborne, Hastings, Palmerston North, Porirua, Ashburton and Dunedin.

Buyers must earn less than $100,000 for one or two people, or $140,000 for three or more people.

They must have a deposit of at least 10 per cent of the house costs, get a commercial mortgage for the rest of the house value, and agree to live in the house for 10 years.

Brian Donnelly of the NZ Housing Foundation said these conditions ruled out many of the people he worked with.

"A lot of our people in housing won't necessarily want two bedrooms at Hobsonville, they are looking for three- and four-bedroom housing around Auckland," he said.

GATEWAY
* How it works
* Low-income first-home buyer applies to Housing NZ.
* Government provides land worth, say, $100,000 with no payments due for 5 years.
* Home buyer must get commercial loan for house worth, say, $200,000.
* Interest on land accumulates at 3 per cent a year, non-compounding; home buyer must buy the land for $130,000 after 10 years.
* Home buyer must also pay interest in cash of 1 per cent a year on the original land value (in this case $1000) in years six and seven; 3 per cent a year ($3000) in years eight and nine; and 5 per cent ($5000) in year 10.

ON THE WEB
www.hnzc.co.nz/gateway
www.hobsonvillepoint.co.nz